Lessons Learned From Jackson Memorial Hospital
I recently read an article in the Miami Herald “Jackson’s Sinking Finances Could Require Cuts” published on January 31. This article and others I have read in the past highlight a clear pattern that has emerged about Jackson. Jackson Memorial Hospital (JMH).
JMH has the same issues that are common amongst organizations with cash flow problems. Cash flow is a lagging indicator of previous problems that have existed in a company. If you look closely you will typically find that every organization that has a cash flow problem suffers from 3 issues:
Clearly Jackson has a purpose to serve Dade County in a way that is noble. However, the strategy is wrong! One of the primary reason’s JMH is in trouble is because of their purpose to serve those people that cannot afford to pay for their healthcare due to lack of insurance. However the strategy of how to serve these people is not working. There is clearly disconnection between the funding system, cost, and demand for the services. Currently there is not enough transparency, accountability and equality between these three components which need to be equal. There are people receiving services that are not part of the tax system that pays for it (law requires them to be served), taxpayers do not want tax increases, government is looking to reduce its subsidies, costs of services are going up dramatically, the number of people needing services are increasing, and money does not grow on trees. If your strategy is not turning into positive cash and you cannot predicate with some certainty that it will produce positive cash flow and be a winning strategy you need to address immediately. Money does not magically appear and financial institutions and the public should not fund an organization that cannot prove its business model.
There are three crucial elements in the people equation: 1) leadership; 2) having the right people and 3) the right people doing the right things. In this case we have the benefit of hindsight which is 20:20. While it is all too uncommon, people should be measured but the results they create. The results at Jackson have been awful by any measure in many departments and in others they have done well. However, from an oversight and running the organization they get an “F.” The main problem at Jackson is the way the leadership structure is set up. Jackson has too many cooks in the kitchen. When you have too many people trying to be the cook and no final person that can ultimately have the final say the organization is in trouble. That is what has become the quagmire at Jackson. So everything is done by majority vote, committee and politics. Forget about quick decisions as you need a committee for everything, lengthy studies, consultants, and it is a journey for any decision to get made.
Let’s assume that the oversight and organizational structure are correct at Jackson. Well we clearly do not have the right people. There have been very few people changes over the last 3 to 5 year; particularly at the Board level. The Board has approved all senior leadership changes. If one were to look at this organization over the last 3 to five years it has been running on an organization treadmill of cutting costs without addressing the real core issues. Instead they continue to fire fight and address the symptoms. The cash flow problem that they are in today could easily have been predicted two years ago and everyone who has been involved should have known it as it was a simple math exercise and very predictable. One only needs to realize that the organization had nothing in the works substantial enough to make a dent in what was obviously coming. To make matters worse, below this leadership team, based on the problems that have been cropping up, this is not an organization of top people doing the right things.
Lastly is the issue is focus. This takes me back to the article that I mentioned above and highlights the lack of leadership and the reality of why this organization is struggling. The article states “Four months into its fiscal year, Jackson is also counting of 94 initiatives worth more than $200 million in shaving costs or boosting revenue. Some of these plans are behind schedule, but executives believe most of them will make substantial gains before the fiscal year ends Sept. 30.” How many people does it take to track 94 initiatives? Who in their right mind would approve a plan that includes “94 initiatives” and would think they could get that done? I recommend they find 4 to 5 initiatives that will have the most impact and find out how to get those done faster. Focus all of their organizational energy on them until they are done. After those are done they can find the next biggest one’s and so on. Lack of focus kills organizations because it causes organizational exhaustion, misuses the best resources, shows a lack of appreciation for priority, and causes the right things to get done poorly.
If you find your organization having cash flow challenges, stop running in circles and chasing the symptoms. Stop and get your strategy right first. This will help you save time and energy. Make sure you have the very best people doing the right things to support your strategy. This will allow you to reduce your payroll costs as a percentage of revenue. Then focus your efforts on the priorities that will have the biggest impact on the bottom line. This allows you to use your cash wisely and to gets your highest return on investment.
Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at (305) 722-7213 or [email protected].